The Centre for Civil Society is awed by the #FeesMustFall student protesters' moral power, and their courage to face South Africa's ongoing police brutality. A zero fee increase would cost R2 billion. Pay the future the money!

Only pressure on South Africa’s elites can ease university fee stressOctober 21, 2015 10.17am SAST

Patrick Bond is a member of the faculties of UKZN and Wits Universities and is a voluntary advisory board member of the National Union of Metalworkers Research and Policy Institute.

There is a new student movement sweeping South Africa’s universities. Its enemies? Excessive fee increases and underpaid workers.

The next step in this fight could be taken beyond university campuses. The final battle will be fought at South Africa’s National

Treasury and Reserve Bank for four simple reasons:1. There needs to be more state funding for higher education. Finance Minister Nhlanhla Nene could make this happen when he delivers his medium-term budget policy statement on October 21 – but he won’t;2. The South African state has the ability to raise such funding from financial markets, corporations and rich people;3. The social spending component of the fiscus has been far too low; and4. Interest rates should be decreased. This would allow for more state borrowing and reduce South Africans’ extreme debt load, including that of recent graduates whose repayment rates are miserable.

1) More state funding for higher educationHigher Education and Training Minister Blade Nzimande set up a committee to review university funding. In its report, released in October 2013, the committee found that:

… the amount of government funding is not sufficient to meet the needs of the public university system … Government should increase the funding for higher education, to be more in line with international levels of expenditure.

South Africa’s budget for universities as a percentage of GDP, the committee reported, was just 0.75%. That’s lower than the Africa-wide proportion of 0.78% and the global proportion of 0.84%. It also falls short of the proportion of 1.21% spent by OECD countries.

The committee also found that in the decade between 2000 and 2010, state funding per full-time equivalent student fell by 1.1% annually in real terms. But each of these students' fees increased by 2.5% annually during the same period.

At a higher education summit held recently in Durban – coincidentally, just as fee protests hit the headlines – Deputy President Cyril Ramaphosa admitted that black Africans make up 79% of South Africa’s population, yet their participation rate in higher education is “less than 15%”. He said:

Higher levels of funding and the expansion of the capacity of the higher education system will be needed in future to ensure that higher levels of participation of African and coloured students are achieved.

Even the centre-right Democratic Alliance accepts that the National Treasury has been “hiding” during this debate. Behind the fiscal conservatism of Treasury, in Pretoria, are the men they report to in the biggest financial institutions and credit rating agencies – mostly in Sandton.

2) State borrowing could be higherIn the last comparison available (from Barclays Bank), both South Africa’s total accumulated public debt and annual deficit are below that of many peer economies.

Also, in historical terms, the public debt today is by no means at an excessive level, according to the Treasury’s own data.

The earlier peak period of relatively higher spending and borrowing occurred during an economic emergency: the 1930s Great Depression. Today’s “Great Recession” justifies the same treatment, though now aimed at meeting low-income black people’s needs.

South Africa’s debt levels. National Treasury

3) Social spending is far too low

Not enough state spending goes to society. The majority goes instead to corporate welfare and rich people. The most recent OECD comparison reveals that South Africa spends at half the level of Russia and Brazil.

OECD 2011, OECD Employment Outlook

4) Interest rates are far too highNeoliberals run not only South Africa’s Treasury but also its Reserve Bank, which has a policy of imposing excessively high interest rates on the state and student borrowers alike.

The main way that the largest northern governments – the US, European Union, Japan and the UK – have dealt with their own recent fiscal squeeze, especially as bank bailouts mounted into the trillions of US dollars, was by printing currency. This practice is called quantitative easing.

In contrast, South Africa’s Reserve Bank keeps inflation in the 3-6% band by using extremely high interest rates. These are entirely inappropriate given the economy’s depressed state. Today, measured by ten-year government bonds, only Russia, Turkey, Indonesia and Pakistan have higher interest rates than South Africa.

Resistance to these argumentsThe four arguments above face both intellectual and policy resistance.

There is the fatuous Reserve Bank claim that South Africa has an insufficiently low savings rate. This allegedly justifies high interest rates.

Yet there is plenty of loose funding, as witnessed by how much money sloshes around in the Johannesburg stock exchange.

Neoliberals do have a valid rebuttal to the arguments above: if interest rates are lowered and social spending and state borrowing raised, there will be even worse capital flight. This is indeed a very serious problem in terms of both illicit financial flows and licit outflows of profits, dividends and interest, especially given that South Africa’s total foreign debt is around US$150 billion. This must be distinguished from public domestic debt, which is still manageable.

The solution lies in reimposing exchange controls.

Taking the fight beyond universitiesTo ease universities' fiscal stress there will need to be some political stress on the Treasury and the Reserve Bank. This, in turn, will place financial stress on the Sandton bankers and corporate elites who have enjoyed amongst the world’s highest profits and engaged in massive offshore funds transfers.

Another opposition political party, the Economic Freedom Fighters, has popularised the phrase “Pay back the money!” Added to this are recent anti-corruption marches that reflect a healthy and widespread anger at the elites' looting.

If students continue to ally with underpaid university workers and link class and race as well as they have so far, the challenge ahead is crystal clear: target the men who control the finances.

An historic victory over South African neoliberalism was won on October 23, after the most intense three-week burst of activist mobilization here since liberation from apartheid in 1994. University students have been furious, as their cry “Fees must fall!” rang out on campuses and sites of political power across this society. But though there will be an effective 6% cut in tuition for 2016, the next stage of struggle looms, with demands for free tertiary education and university labor rights atop the agenda.

The #FeesMustFall movement’s first victory comes at a time that the African National Congress (ANC) ruling party confronts unprecedented economic pressure and social unrest. GDP growth will be only 1.5% this year and probably the same next year, lower than population growth. This is the most unequal of any major country, and the official poverty rate (at $2/day) has recently risen to 53%.

The World Economic Forum last month judged the South African working class as the most militant on earth – the position amongst 140 countries held since 2012, when 34 mineworkers were massacred at Marikana – and the police reported recently that last year, nearly 2300 protests turned “violent” (in police terminology). The deregulated corporate elite enjoys the world’s third highest profits, yet remains intent on looting the economy at a rate as fast as any. All these measures have amplified since the ANC took power in 1994.

The desperation flash point this month was the announcement of double-digit increases in university tuition fees. Students demonstrated not only against local managers at more than a dozen campuses. Their organizations united across the ideological spectrum, from socialist to nationalist to even the center-right student wing of the main opposition party, and hit national targets.

They began by storming the parliamentary precinct in Cape Town on October 21, then marched to the Johannesburg and Durban headquarters of the ANC on October 22 and 23, and finally demonstrated – more than ten thousand strong – at President Jacob Zuma’s office in Pretoria on October 23.

There, restraining fences were torn down by some of the activists and tyres and latrines were burned, with police once again responding by using stun grenades, rubber bullets and water cannons. Refusing to come out to address the crowd, instead Zuma held a press conference where he conceded to the students’ main demand: no fee increase for next year (in spite of general price inflation expected to be 6%).

The trajectory through race to classThe current insurgency began late last month with sporadic acts of fury. At the University of KwaZulu-Natal in Durban, small groups of students burnt an administration building and nearby cars, and students were then caught bringing human excrement on campus presumably for throwing, a tactic used successfully six months earlier to catalyse the dismantling of a hated statue at the University of Cape Town (UCT).

That was the #RhodesMustFall movement. Within a few weeks of a “poo protest” in which excrement was hurled at the prominent likeness of 19th century colonial mining lord Cecil Rhodes, thousands cheered when the statue was removed from the scenic campus. But their other demands for university transformation and “decolonization” – racial equity, a different campus culture, curriculum reform to promote Africanization, labor rights for low-paid workers, more indigenous African professors (there are only five out of more than 250 senior faculty at Cape Town) – were unsuccessful.

After a breather, at UCT and Johannesburg’s University of the Witwatersrand (“Wits”), the country’s two traditional sites of ruling class reproduction, student protests revived this month. Of the 19 tertiary institutions that erupted in protest this month, these two were the best organised, most sustained and non-violent, mainly using the tactic of entrance blockades, then moving to the nearby arterial roads. Disciplined student leaders emphasized non-violent civil disobedience, with white students often taking place on the front line of struggle as buffers, given their skin privilege. Worsening police brutality and occasional clashes with higher-income drivers who tried driving through the blockades did not deter the activists.

On October 21, inside Cape Town’s Parliament House, the opposition Economic Freedom Fighters’ (EFF) support for their cause came before Finance Minister Nhlanhla Nene delivered his medium-term budget speech, which EFF leaders ardently tried to postpone, before being forcefully evicted. Outside, thousands of courageous students broke through a fence and nearly made their way into the main hall where Nene was holding forth.

But although there is still plenty of scope for fiscal expansiveness, Nene’s budget was heartless: no new money for universities (just condemnation of “unconstructive” student protests), and a tokenistic $0.75/month rise in grant payments to the poorest pensioners and disabled people (who currently receive $105/month). Nene dishonestly claimed that this plus a prior tiny raise offered in February are “in line with long-term inflation.” Since the inflation rate for poor people is much higher than the norm due to the far higher share of faster-inflating food, housing and electricity costs in their budgets, in reality he imposed a 2% real cut.

Nene did find funds for a three-year $63 billion infrastructure program whose major projects promote, first, exceptionally destructive coal exports mainly by multinational corporations; second, the Durban port-petrochemical complex’s expansion; and third, iron-ore exports. Yet there is vast world over-capacity in coal, shipping and steel, with South Africa’s second major steel producer barely avoiding bankruptcy last month. But these White Elephant mega-projects continue to get the lion’s share of state, parastatal and private infrastructure funding.

The influence of big business on Nene’s budget team is blatant: for example, the world’s largest mining house, BHP Billiton, still gets electricity at 1/10th the price of ordinary consumers. Corporate tax evasion and illicit financial flows are now notorious. Nene made a downpayment on nuclear reactors worth $100 billion, as well as the first funding tranche for another pro-corporate investment, the BRICS New Development Bank, whose target capitalisation (spread among five countries) is $100 billion.

Credit rating agencies and a “communist” ministerWhether seen through the eyes of students, workers, the poor, women and environmentalists, Nene’s budget begs for intensified social struggle. October 21 was, however, the first time that a major spontaneous protest targeted the finance minister at such a sensitive moment. For Nene, the only objective appeared to be appeasing the banks’ credit ratings agencies.

As Reuters reported, Nene “downplayed the effect of university students storming parliament as he delivered his medium term budget on the credit rating of Africa’s most advanced economy. ‘What matters for the ratings agencies is our response as government in addressing these challenges,’ he said about the students’ demands to keep tuition fees unchanged.”

Government’s response was a combination of widely-condemned police brutality and ineffectual seduction by the ruling alliance’s left flank, especially the SA Communist Party whose leader Blade Nzimande is also Minister of Higher Education. He was shouted down by protesters outside parliament when he tried to explain why their demand was unrealistic and they would face a 6% increase.

Nzimande’s 2013 Ministerial Committee for the Review of the Funding of Universities found “the amount of government funding is not sufficient to meet the needs of the public university system… Government should increase the funding for higher education, to be more in line with international levels of expenditure.” But Nzimande had refused to release a 2012 commissioned study on how to finance free tertiary education.

A boost to anti-austerity activismStudents simply refused to accept Nzimande’s 6% tuition rise. So the march on Pretoria two days later – and threat of a full storming of Zuma’s office – must have been the decisive factor in the state’s reversal. Although the cost of a deferring a tuition increase is estimated at between $150 and $300 million, by making this concession Zuma has given encouragement to many more protests and Pretoria marches in future.

For those in the society watching and rooting for the students, this was a critical moment, perhaps ultimately as important as the breakthrough Treatment Action Campaign fight for free AIDS medicines fifteen years ago. For as Nene signalled, a more damaging period of austerity looms. Thanks to Nene’s tight-fistedness, there will be a relatively small budget deficit (3.3% of GDP), but financial commentators are full of threats about South Africa following Brazil’s recent downgrading to a junk-bond rating by Fitch, Standard&Poors and Moodys, the creditors’ cruel rating agencies.

The class war rages on. Other student demands remain outstanding: free tertiary education for poor and working people as the overall goal, and an end to labor casualization and outsourcing for low-paid university workers. Many such workers barely receive $100/month, and with a poverty line of $60/person/month, raising a family on starvation wages is impossible.

The task of retaining this visionary student-worker alliance in coming weeks and maintaining a national presence will be as difficult as is the multi-class ‘United Front’ organizing now underway. Difficult yes, but now, nothing seems impossible in this exceptional site of class struggle.www.counterpunch.org

Funding for higher education in SAInterview with Prof. Patrick Bond Podcast: Play in new windowDownload (Duration: 22:02 — 20.2MB)

There’s plenty of money for students – and other poor South Africans – if we reprioritise(The Star, Cape Argus and The Mercury, 28 October 2015)

How to make good on the 0% university fee increase committed by President Jacob Zuma after such courageous student protests last week at Union Buildings, ANC headquarters and parliament?

South Africa’s R1.451 trillion state budget for 2016-17 must expand or be rejigged by just 0.3%. True, in addition to the immediate R4.2 billion shortfall, much larger sums will be needed to subsidise free tertiary education for those unable to pay, as well as to end out-sourcing of university workers.

So where can the state find the funds? According to some, Zuma’s government is just too broke. As my Wits School of Governance colleague Graeme Bloch claimed last week in The Conversation (albeit without supporting data), “There are many problems for the government, including the state of the world economy, which ensures that there is not enough money” for free university education.

But if a 2012 government commission set up by Minister Blade Nzimande (and hidden away since) as well as even the conservative SA Institute for Race Relations agree that free tertiary education is affordable, why the resistance?

The vast power of financiers and international credit-rating agencies means South Africa suffers a slow-motion version of austerity. The threat of a “junk-bond” rating always looms, and last Wednesday, Finance Minister Nhlanhla Nene’s freeze on new state programmes and civil service hiring revealed the Treasury’s paranoid fear of Standard&Poors, Fitch and Moody’s.

So even while South Africa’s world-leading inequality is generating unprecedented public debate, Nene chose to squeeze 17 million beneficiaries of state grants, including children. “The old-age, war veterans’, disability and care dependency grants have each increased by R10 per month from 1 October 2015 to bring the annual increase in line with long-term inflation.” The goal, he said, was to “ensure that the value of grants keeps pace with inflation.”

Sorry, it isn’t: a year ago, the main old age and disability grant was R1350/month. In February, Nene announced a rise to R1410, and last week to R1420. The 2015-16 pro rata R65/month increase therefore amounts to 4.8%, yet the national Consumer Price Index inflation rate for the same period – according to Nene’s own budget document – is pegged at 5.5%, rising to 6.0% in 2016 and 5.8% in subsequent years.

However, food and electricity prices are rising far faster than the overall inflation rate, and since they are a much larger share of a poor person’s income, an inflation figure closer to 7% would be more accurate. So Nene has, this year, effectively shrunk poor, elderly people's budgets by more than 2%.

Where is the money, then? A glance at the Treasury’s spending gives an indication of how to fund student fees, to end low-paid university workers’ outsourcing, and to raise poor people’s grants.

First, if South Africa were a more peaceful society as a result of higher social spending and lower interest rates, two items could be cut quickly. Security cluster spending – R184 billion next year – is growing quickly in part because of the 20% rise in ‘violent’ community protests last year, to nearly 2300. The state allocated itself R3.3 billion extra for personnel and armaments against civilians, including high-pitch sonic sound cannons. The epidemic of self-destructive, extreme brutality suggests police weapons should be holstered, not amplified.

Another item desperate for a cut is payment of interest, which will cost R144 billion next year. Instead of raising interest rates to a level which is now the world’s fifth highest, the Reserve Bank should reduce rates and with them, repayment costs. (That would also require imposition of exchange controls to halt the resulting capital flight.)

In addition, the Treasury’s category “economic infrastructure” includes many ill-considered projects. Consider just two voracious White Elephants promoted in the 2012 National Development Plan (NDP) and Presidential Infrastructure Coordinating Commission (PICC). As former eTV head Marcel Golding exposed in court a year ago, PICC projects were promoted generously on eNews by Economic Development Minister Ebrahim Patel in exchange for favours never delivered.

The first PICC project is Transnet’s proposed 464 km railroad link from the Waterberg’s coal fields in Limpopo to Richards Bay. With funding of R40 billion, the parastatal’s Siyabonga Gama reckoned four years ago that the line could raise the area’s coal exports from 4 to 80 million tonnes a year.

In reality, local coal prices peaked at $170/tonne in 2008, but by 2012 had fallen to $80 and today are just over $50. Nene’s budget document anticipates further decline in coming years, especially with climate change a growing crisis. Even the industry’s leading expert, Xavier Prevost, admits coal exports are now a money loser. Should that vast project – plus the R60 billion worth of Chinese locomotives ordered for mainly coal transport – not be reconsidered?

The second PICC project to rethink is Durban’s port-petrochemical expansion, which at a cost of R250 billion, the NDP estimated would facilitate an eight-fold rise of container traffic: from 2.5 million annually the last few years to an astonishing 20 million by 2040. Yet no one else thinks this is possible, given global shipping stagnation (not to mention resulting damage to SA manufacturing). Moreover, using the old airport site for the new ‘dig out port’ is uncertain since the Department of Energy and KZN provincial government also want it for a nuclear energy reactor.

The biggest infrastructure bill is for Eskom’s coal-fired power plants, backed by a World Bank $3.75 billion loan (its largest ever, but one whose repayment should be deeply discounted thanks to lack of Bank due diligence). Eskom chair Valli Moosa improperly allowed the ANC’s Chancellor House to front for Hitachi on a R60 billion rand tender that drove the price up by many more tens of billions, as 7000 welds needed to be redone at Medupi, now seven years behind schedule. Recall too, that the world’s biggest mining house, BHP Billiton, will continue to get subsidised Medupi electricity: in recent years it cost just R0.12 c/kilowatt hour, i.e., a tenth of what we ordinary consumers pay.

Such generous “corporate welfare,” rife within Nene’s three-year R800 billion mega-infrastructure budget, makes it hard to end the White Elephant breeding, to better insulate South Africa from adverse world economic trends, and to protect the environment.

And much larger beasts loom on the horizon: the R300 billion share Pretoria has committed to capitalising a BRICS bank for corporate infrastructure, a project that even its new South African director Tito Mboweni condemned in 2013 as “very costly”; and the trillion rand estimated for eight nuclear reactors, which in July Mboweni announced the BRICS Bank could finance.

Subsidies gifted to the rich and powerful by corrupt politicians are typically ignored by commentators with a neoliberal bias. But as Zuma himself put it rather unguardedly last month, “I always say to business people that if you invest in the ANC, you are wise. If you don’t invest in the ANC, your business is in danger... This organisation does not make profit, but we create a conducive environment to those who make profit."

The great merit of the fury unleashed by the students last week was not simply that their protest against Nene, Nzimande and Zuma and their short-term victory will inspire both a closer reading of the budget and a revolt against it. It is also that the outrage society felt at how badly the students were treated has rapidly turned to confidence that protest works, redirecting funding that is so desperately needed for social progress.